LONDON - PPL Therapeutics plc announced a further breakthrough in cloning technology with the birth of two transgenic lambs produced by gene targeting.

The lambs, called Cupid and Diana, each has a human gene inserted at an exact location. Alan Colman, PPL's research director, told BioWorld International, "This is an extremely effective technique for replacing one gene with another. But it not only works on a one-for-one basis - you can chose where you insert a gene, so that for example you get maximum expression, or you can disrupt an existing gene by inserting a nonsense DNA sequence, to produce animal models of disease."

Previously there has been no control over where the transgene was inserted, limiting expression, and also meaning that the animal's own gene was active. This has made extracting the human protein from the milk of transgenics a more complex process.

While it has long been possible to produce knockouts of smaller organisms and even mice, PPL claimed it is the first to do so with larger animals. The gene is introduced at a specific place in the chromosomes of livestock cells in culture. Offspring carrying the desired genes then are produced from these cells using nuclear transfer, the technique used to produce Dolly, the first cloned lamb. The technique was developed in house, and the company, based in Edinburgh, Scotland, says it now is applying for patents.

The technique will be of immediate commercial importance to PPL as it will speed the production of founder transgenic flocks. The ability that targeted insertion gives to enhance expression will accelerate PPL's capacity to produce therapeutic and nutritional proteins in the milk of the transgenic stock. The company also intends to apply the method to pigs in its xenotransplantation program. While no pigs have yet been born as a result, Colman said the company already has succeeded in inactivating a gene in cultured pig cells that should make pig organs more immunocompatible with humans. The technology will be licensed in other application areas, notably for the production of animal models of human disease.

Targeted insertion is a Holy Grail of human gene therapy, and Colman said the technology could be used in ex vivo treatments.

PPL did not disclose what human genes Cupid and Diana are carrying - "to preserve our commercial advantage" - though Colman said one of them is commercially significant. Several more lambs carrying other genes are yet to be born.

The company says it will apply the technique to producing human serum albumin, for the treatment of burns, in transgenic cows. This should reduce the cost of the protein, which is currently obtained from human plasma.